Adopting a Culture of Experimentation

“Almost any question can be answered cheaply, quickly and finally, by a test campaign. And that’s the way to answer them – not by arguments around a table. Go to the court of last resort – buyers of your products.”

“Scientific Advertising” was published in 1923 by Claude Hopkins, who began to evangelize the need for testing and experimentation in marketing and advertising. 40 years later David Ogilvy a huge disciple of Hopkins was quoted as saying that “Nobody, at any level, should be allowed to have anything to do with advertising until he has read this book seven times.”

Yet, some 50 years after Oglivy attempted to popularize the need for experimentation “Companies pay amazing amounts of money to get answers from consultants with overdeveloped confidence in their own intuition. Managers rely on focus groups—a dozen people riffing on something they know little about—to set strategies. And yet, companies won’t experiment to find evidence of the right way forward” findsDan Ariely, author of Predictably Irrational.

In my last column, I shared how Scott Cook, co-founder and chairman of Intuit, shared in his presentation at SXSW how he has been successfully moving his traditional research and intuition based company of 30 years to a culture of experimentation. What stands in the way of getting our companies there? The longer the tenure of leadership the more likely they are to stay entrenched in their ways. Dan Arielly points out that leadership stays stuck with their “overdeveloped confidence in their own intuition”.

One way to change the organizational issues that handicap a corporate culture from experimenting is getting the corporate leaders to take responsibility for evidence gathering and to “remove the speed bumps in the experimenters’ way!” according to Scott Cook, co-founder and chairman of Intuit.

A traditional company that has been famous for it’s quantity of testing is Capital One, in fact it did a reported 80,000 tests in 2003 – on everything from marketing copy to price points. Of course many of us know the success Amazon has had doing a reported 200+ tests at any given moment and with their constant focus on data driven optimization on every aspect of their business from merchandising to promotions to warehousing and logistics. They are just two exemplary examples of analytically rigorous, knowledge-driven business success, but there are many more. That is not to say that creativity and intuition don’t have their place, but we must find a proper balance.

How does Capital One drive this level of experimentation in their organization?

“it differentiates its marketing operations on three dimensions: 1) state-of-the-art technology; 2) rigorous testing and analysis of products, segments and consumer behaviors; and 3) flexible operations and services that enable the organization to capitalize on the intelligence it generates and pursue new opportunities.

This fits with what I shared were the three traditional stumbling blocks that keep most organizations from experimenting:

To change an organization’s culture to being customer focused you must remove the data & work silos. Then you need leadership that supports and rewards risk because they themselves use data to support assumptions & hypothesis and to steer the company in real time.

Next week, I am headed to the Monetate Agility Summit in Philadelphia. I am excited because their testing and experimentation platform has enabled companies to go from the industry average of 2-5 tests a month to a client average of 59 concurrent tests in a month. They have obviously removed the technological limitations many companies experience when trying to adopt testing online. I am looking forward to speaking to many of these companies as they are transforming into analytically rigorous, knowledge-driven business successes. For example, one client jumped out of the gate and started running a staggering 600 test campaigns in their first 60 days on the platform. Let me know what would you like to learn from them?

Not everyone can be or should be a Monetate client. There are other ways for an organization to remove the technological limitations. However, when technological and legal issues are overcome, the organization’s culture issues may hold them back. Why is that?

Why do you think people and companies fail to experiment? Do you think they don’t understand what an actual experiment is? Do you believe they think that they might already be doing experimentation? Are they too afraid of risk and failures? Why do companies fail to adopt a culture of experimentation? I have some ideas but I’d love to hear what you think.

Why would you add the burden of independent thinking to those already hectic days of meetings, emails, FB games, and social sharing? And if independent thinking wasn’t bad enough in itself, building support and consensus for an interesting experiment (or – heaven forbid – change based on a successful experiment) is a buzz kill.

I think companies fail to adopt a culture of experimentation
for many reasons but as you stated in our Twitter conversation, ego is an
issue. But fear and the speed in which we are required to deliver results are equally responsible.

We’re shifting from a world where decisions are made based
on experience to a world where the old rules no longer work. This creates a lot of anxiety and uncertainty in everyone.

So it’s more than just bruised egos and an overdeveloped
confidence of intuition. In a culture that is ruled by experience, being wrong is the equivalent of career suicide, so most companies take the safe route and do nothing, the status quo wins and real time data driven decisions and experiments ironically, become too risky. (We’re seeing the same irony in the shift from industrial economy to connection economy.)

In any experiment, at least one treatment gets the short end of the stick but if your company mindset is stuck in the experience-based world, the short end of the stick goes to the leader for sacrificing the short-term gain over the long-term, since short term is how we judge success from quarter to quarter, many cultures are too scared to risk anything other than status quo.

Bryan, we have just signed on with Monetate. I am so excited to have the ability to do this kind of testing (or any for that matter) that has never been done before in the company that I’m working for. To let the customers tell the company what to do is such a foreign idea, that I am looking forward to making some waves.

Amazon will be offering the Kindle version of our book for free. Please let your friends and colleagues know that they can get their copy of Buyer Legends: The Executive Storyteller’s Guide. The post Free 9/22-26 – Buyer Legends: The Executive Storyteller’s Guide appeared first on Buyer Legends.

Customers are more connected than ever. Software continues to reduce customer friction everywhere, from customer service to fulfillment. Logistics and payment systems continue to expand what’s possible for customers. Customers expect more and better. Retail customers aren’t delighted with retailers. They feel differently about Amazon and in both cases it’s the CEO’s fault. All the […]

What’s up with Legendary Links? From time-to-time, we’ll post some of the interesting articles that we found interesting and that you may have missed. Please let us know if you find them interesting or if you’d like to share other links that we may have missed. Which Type of Voice Actor Should You Use […]